Beneficiary Enterprises: IP Trust Funds Boost Confidence

2011/9/8By Kevin Nie, China IP,[Patent]

As a national innovation pilot area, Zhongguancun Science and Technology Park gathers a number of S&T-based small and medium enterprises. In April this year, China Technology Exchange (CTEX), COFCO Trust Co., Ltd. (COFCO), Beijing Vestone Capital Co., Ltd. (Vestone Capital) and Fuhigh Financial Services jointly set up the Zhongguancun Innovation IP Trust Plans for Assembled Funds (Phase I). Four enterprises, AIRSYS Refrigeration Engineering Technology (Beijing) Co., Ltd. (AIRSYS), Beijing Cleartimes Environmental Protection Engineering-Tech Co., Ltd. (Cleartimes), Baogui Stoneart Technology Co., Ltd. (Baogui Stoneart), and BiaoQi Century (Beijing) Information Technology Co., Ltd. (Baoqi Century, obtained trust funds totaling 20 million Yuan with intellectual property mortgage. For many research-based SMEs in the park, it means a new financing channel in the future.
 
China IP interviewed several beneficiary enterprises. Loan recipients reported that they generally believed that it is more flexible to get trust funds with an IP pledge and the procedures are very simple. It can meet their financing needs in time and provide strong financial support for the commercialization of enterprises’ intellectual properties.
 
AIRSYS : Trust Fund Inspires Innovation Enthusiasm.
 
Founded in 1995, AIRSYS is an international professional manufacturer of air conditioners. It is a foreign-funded enterprise engaged in design, development, manufacture, installation and maintenance of air conditioning equipment for computer rooms, mobile base stations, outdoor telecommunications cabinets and heat exchangers, IDC systems etc. as well as air conditioning products for large-scale medical equipment.
 
According to AIRSYS Chairman Chen Yunshui, AIRSYS’s internationally state-of-the-art technologies originated from European advanced technologies. The company has independent product development capability and maintains its leading edge in technology and quality. Its market is positioned as air conditioning in “critical environment” and the company has high competitiveness in this particular field. Its market covers communications industry, information industry and medical industry. After years of efforts, AIRSYS has become a well-known brand in ICT air conditioning field and enjoys a high reputation in the industry.
 
It is learnt that AIRSYS obtained the High-tech Enterprise Certificate issued by the Beijing Science and Technology Commission in 2002. It was recognized as the first batch of Beijing High-tech Enterprises in 2008 and was selected as National and Beijing Municipal Patent Pilot Enterprise in 2010.
 
Chen Yunshui said AIRSYS has determined to develop into an outstanding Chinese enterprise and even international company from the date of its establishment. It has put in a lot of human and financial resources in brand building and corporate identity system, which lays a very good foundation for brand construction. Patent work is another major focus. As of April 2010, the company has filed more than 70 patent applications, of which seven invention patents were granted, along with 22 utility model patents and 2 design patents. AIRSYS has also maintained its trademark for 12 years. However, the high IP enforcement cost put a heavy drag on the company every year. In order to maintain continuous corporate innovation and development, the company must have long-term stable fund resources.
 
“Among small and medium enterprises in China, a considerable part has gained a certain level of innovation ability and brand recognition. These SMEs generally have funding needs, but banks do not design enough financing alternatives for intellectual property. With the introduction of Intellectual Property Mortgage, SMEs get a new channel for financing. Since government provides a certain percentage of interest subsidies, the cost is controlled within an acceptable range.”
 
Chen Yunshui said. Chen Yunshui said, compared with bank loans, intellectual property trust fund solves SME’s problem in financing qualification. Most technology-based SMEs are “lack of assets, but rich in intellect.” Since they don’t have enough assets to pledge, their applications for bank loans are usually rejected. Compared with private lending, the costs of IP trust fund are relatively lower. Government intervention and support has played positive role in the success of intellectual property mortgage project.
 
The Trust Plan for Assembled Funds is based on companies’ in intellectual property and financial needs. The trust issuers raise funds from the public and then distribute to various companies, which will help defuse the risk of default.” said Chen Yunshui, “In the specific operation, as the mortgage provider and capital demander, companies are required to provide qualified mortgage, accept examination by the fund issuers, return principal and pay interest as scheduled and receive credit approval. This is the second time for AIRSYS to apply intellectual property mortgage funds. Before the issue of this trust fund, the company made full preparation, including the timely payment of principal and interest for the first phase, preparation for application material and examination for the second phase, as well as handling the mortgage procedures with the issuer.”
 
“The intellectual property trust fund is still new in China and is at the exploratory stage. The number of beneficiary companies is still limited. However, there are a great many technology-based SMEs in China and the majority of them have financing needs. Therefore, the market for IP mortgage is broad. With a set of effective risk control methods, there would be great space for the expansion of intellectual property mortgage. Intellectual property financing solutions can not only solve SMEs’ financing problems but also inspire the passion for innovation.” Chen Yunshui has confidence in its prospects.
 
Cleartimes: Finance Enhances Core Competitive Edge
 
Cleartimes is a high-tech enterprise engaged in contracting and technical services for coal smoke desulphurization projects and specialized in gas desulphurization projects of coal-fired boilers and sintering machines.
 
Zhou Qi, Chairman of the Board of Directors of the company, told China IP that the company’s core competitiveness is mainly reflected in three aspects. The first is “specialization.” Cleartimes is specialized in general contracting and technical services of gas desulphurization for coal-fired boilers, sintering machines, coke ovens as well as methanol and sulfur recovery projects. The company pays close attention to the industrial development for air pollution control and R&D of related technologies. Its main business has always been focused in “air control” field. The second is “research”. The company has profound understanding of the importance of techniques and technologies with intellectual properties. IP is the key to business survival and development and is an important manifestation of core competitiveness. Considering the characteristics of the domestic market, the company learns from foreign advanced technologies and develops more than twenty systems and products at comprehensive, standard and economical levels. The third is “application”. The company applies the patented technologies into production practice. The “Double loop vertical desulphurization process system” has been applied in environmental protection projects in Weihai of Shandong and Erdos of Inner Mongolia. The company has established long-term, stable and friendly relations of cooperation with South Korea Cottrell Company, Japan Tsukishima Machinery Co., Ltd. and China ENFI Engineering Co., Ltd. and they would give full play to their technological advantages to jointly develop the environmental market in China.
 
It is learnt that Cleartimes has fully considered the technology and market characteristics of China-made small and medium boilers and developed the gas desulphurization technologies adapting to coal-fired boilers and developed four technologies including “double-loop vertical desulphurization process system,” “double-loop vertical desulphurization device with calcium carbide desulphurization agent,” two which have been authorized with patents. Three more patents are expected to be authorized this year. The company also raised another two patent applications for “dioxin treatment” this year.
 
Zhou Qi said in the interview, that the Zhongguancun Trust Plans for Assembled Funds has played positive role in promoting the development of science and technology enterprises, especially the small and medium enterprises like Cleartimes. It has mobilized S&T enterprises in technology innovation, promoted the self-development of S&T enterprises and guided companies to increase their input in R&D, technological innovation and transformation, which created favorable conditions for enhancing core competitiveness of the enterprises.
 
BiaoQi Century: Accumulates Credit upon Trust
 
BiaoQi Century is a high-tech enterprise registered in the Zhongguancun Science and Technology Park with the registered capital of 10 million Yuan. It has obtained certificates of Beijing Software Enterprise and Software Product. The company has strong R&D capability and has independently developed basic office platform software, intelligent document exchange system, document management information system, supervision and inspection system, file management information system, unified information gateway platform, sunshine power administrative and approval system, administrative penalty decision support systems, campus information management system, individual office system (including e-mail system and instant messaging system), intelligent switching boxes and other hardware and software products.
 
General Manager of Biaoqi Century Wang Bo introduced that after five years of development, the company has gradually built its brand reputation, found competitive market position, and obtained support from government, customers, suppliers, investors, financial institutions and agencies. It was awarded with “Beijing Innovation Product Certificate” and supported by innovation funds of Zhongguancun Science and Technology Park. The company was listed among the “2009 Deloitte Top 50 China High-Technology and Fast-Growing Companies” and the “2009 Deloitte Top 500 Asia Pacific High-Technology and Fast-Growing Companies.” From aspects of intellectual property, Biaoqi Century has been authorized with three national patents and 23 software copyright certificates. The company was also selected as “Beijing Patent Pilot Enterprise”, first batch of key enterprises for Zhongguancun Gazelle Plan and key enterprise supported by Beijing Municipal Finance Bureau.
 
It is learnt that since last year, Biaoqi Century has participated the trust plan initiated by China Technology Exchange for two phases. Last June, the company was selected into the “Trust Plan for Promoting Transformation of Scientific and Technological Achievements” and obtained loans of one million by patent mortgage. In April this year, the company was again qualified for Zhongguancun Innovation IP Trust Plan for Assembled Funds (Phase I)” and obtained two million by pledging software copyright.
 
Wang Bo once worked in bond issue department of banks and was one of the first stock and bond professionals in China. He then served in several Zhongguangcun companies as executive responsible for business management, financing and M&A. In 2005, he founded Biaoqi Century and served as general manager. His life experiences gave him a thorough understanding on the financing needs and the financing environment of SMEs.
 
As a beneficiary of the trust plan, Biaoqi Century fully confirmed the role of intangible asset pledge financing, particularly intellectual property mortgage in promoting SME development. He stressed that S&T enterprises like Baoqi don’t have many fixed assets. Computer equipment, after three years of depreciation, its value has almost been depleted. However, intangible assets created by research and development are worth millions.
 
In the interview, Wang Bo also disclosed a detail, “When participating in ‘Trust Plan for Promoting Transformation of Scientific and Technological Achievements’, the security company told me that if I am willing to provide personal property as collateral, the bank can lend me a few million more. I made a quick response that I would rather take a smaller loan since an IP mortgage can fully present the nature of intangible asset pledge.”
 
Dealing with financial institutions for many years, Wang Bo also lays great emphasis on the construction of credit system. He said that SMEs, especially technology-based SMEs are lack of fixed assets and credit records, so that it is difficult for them to get loans. Security agencies only take tangible assets as collateral and require companies to achieve certain level of credit rating. Therefore, while investing in research and development, Biaoqi Century also makes input in building its credit system. With regard to credit accumulation, the company has made intentional efforts by means of standardizing financial accounting, hiring certified public accountant to audit each year and actively participating in credit promotion activities. Therefore, the company has drawn attention and objective evaluation from social intermediary organizations and established their own credit image. In particular, the intangible assets will not only promote the corporate development, but also gain recognition from government and social agencies. The company has obtained related “labels” (such as various awards, certificates and qualifications) to enhance the value of intangible assets and protect the effectiveness of corporate credit. After years of efforts, the credit rating of Biaoqi Century has been increased year by year and now reached BBB+. In December 2010, the company won the title of Outstanding Member of Zhongguancun Credit Promotion Association and was listed in the Zhongguancun Top 100 Most Promising Companies.
The reporter also noted that different from other enterprises, Biaoqi Century has a special position called Financing Specialist, who is responsible for all external financing work. Its Financing Specialist Ma Xuefei said in the interview, “This is indeed a major feature of our company. It fully reflects the company’s emphasis in financing work and ensures the professional direction of corporate financing.”
 
(Translated by Li Yu)

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